New Retail dehyped: When gimmicks are not enough

As part of my work as a study tour leader I do a lot of location scouting. China’s New Retail features heavily in my tour programs since it has high levels of interest outside China and is one of the more visible and easily accessible aspects of Chinese digital innovation. I have visited close to 60 new retail locations in Shanghai, Beijing and Hangzhou, evaluating them for our tours. Since the retail sector is highly versatile, I often revisit locations before the tours start. When I do so, I often find that selected locations have disappeared or remarkably changed. In the last tour I delivered I had to replace 25% of the locations I had selected just months before.

Most of the time I find potential locations through news sources about New Retail initiatives. More often than not this concerns skilfully crafted PR releases by Alibaba on their promotional website Alizila. Ever so often, the real thing falls short of the expectations that these slick videos and articles have created. And frequently visiting the same locations over time and seeing the changes that take place give you a good understanding of what works and what doesn’t in the wonderful world of New Retail. In this article, the first of two, I’m sharing some of these findings. This time we’ll look at some of the technological gadgets that have been introduced as one of the aspects of New Retail.

Bluetooth shoes

Tmall Intersport can be found in the popular Qianmen shopping street, south of Beijing’s Tiananmen Square. The location of the store seems far from optimal as it is lies west of the main shopping street, hidden behind a line of souvenir shops. If you’re not specifically looking for it chances are that won’t even see it. The choice of location is not only remarkable because of the poor visibility, but also because the profile of the store doesn’t quite fit in with the various restaurants, souvenir and snack shops that can be found in Qianmen. This might well be the reason that there never seemed to be much store traffic on the six occasions I visited the store.

As the name implies, Tmall Intersport is a collaboration between Alibaba’s e-commerce platform Tmall and the sports retailer Intersport (watch their PR video here). Tmall provides all the technology in the shop, thereby creating a clear offline-to-online link with Intersport’s shop on Alibaba’s Tmall e-commerce plarform. The longtail of Intersports product range can be viewed on so-called cloud shelves and, after scanning a QR code, products can be ordered online and delivered to your home address (so far for sustainable shopping …). Another technology that is highlighted in press releases about Tmall Intersport are the product displays that ‘spontaneously’ show information about a shoe when you take it off the shelf. At least … sometimes that’s what they do. At first, I thought the technology worked through image recognition by the cameras above the screens, but when different sport shoes did not trigger any response on the screen, I decided to ask the shop assistants for help. It turned out that the technology was a lot less advanced. The screens are in fact activated by ‘beacons’, Bluetooth transmitters that are attached to the shoes. The problem, however, is that they are only attached to half of the shoes on display. As a result, the screen will respond to one shoe, while another leaves the customer wondering why the interactive screen stopped functioning.

Mirror mirror on the wall…

I’ve come across the much-discussed ‘magic mirrors’ at various locations I have visited. PR messages make you believe that the mirror will scan your body, after which you can virtually try on various items from a shop’s assortment. Indeed, the animation that plays on the screen makes you believe that your whole body is being scanned. But the only recognizable thing that you will see in the mirror afterwards is a picture of your face on a standard torso. Maybe these mirrors are just trying to be polite, but the person in the mirror might not necessarily resemble reality. In my case, I got to see my long lost slender twin brother. In the mirror you must adjust your height and posture through different sliders to make the image resemble you. You can then project products from the shop’s assortment onto that image. That range is sometimes frustratingly limited, so you quickly get bored of the magic of these mirrors.

In October I visited another collaboration between Tmall and fashion brand Kerr & Kroes, located in Shanghai’s Joy City shopping mall. The shop was quite remarkable for its many cloud shelves, magic mirrors and video games, but I couldn’t help noticing that even on busy weekend the store traffic was limited. And even with the claw machine that gave you three tries after scanning a QR code and following the store’s WeChat official account, there seems to be very few views on the actual messages that this account posts. When returning five months later it seemed like all Jack Ma’s mirrors and all Jack Ma’s cloud shelves could not save Kerr & Kroes. The shop was deserted, and the roller screen had a note saying it was ‘temporarily closed for internal adjustment’. I have seen signs like that before in China, more often than not they mean that the shop is closing down permanently. And even more remarkable, there seemed to be no more sign of the Tmall co-branding.

Left: me, according to a magic mirror. Right: Tmall Kerr & Kroes, temporarily closed for internal adjustment.

Nobody Home Times

In Hangzhou I headed for Home Times, a shop that was announced in October 2017. Home Times is supposed to have large interactive TV screens that customers can use to view products in a virtual home setting, as can be seen in this video. When interested in a product, shoppers can scan a QR code to order the product online and have it delivered to their home. I went to visit Home Times’ store inside Hangzhou’s Yintai shopping mall on Yan’an Road give these screens a try. Arriving there, I only found deep blackness staring back at me from the turned off screens. I explained to the staff that I was a writer and study tour leader and would like to try out these interactive screens. The shop attendant went away, probably to consult a manager, only to return a minute later to tell me the screens could not be turned on for me and would only be active during certain times of the day…

So, I headed for a second Home Times location in Hangzhou which was said to be located in the enormous In77 shopping area. At the location where Home Times was supposed to be according to Baidu Maps no such shop was present anymore. Not giving up so easily I went back to the first Home Times during a later hour on another day, only to find that the screens were still turned off. I didn’t bother asking about them again …

The interactive screens at Home Times showed little interactivity.

No magic at Innesfree

Okay, let’s forget about Home Times and head for the Innesfree store in the city centre of Hangzhou. According to a press release by Alibaba the store had been ‘revitalized by New Retail’ in July 2018. And indeed, this shop of the Korean beauty brand has interactive shelves that would play a video for a product you picked up, as well as a cloud shelves with the full Innesfree assortment available in its Tmall store.

But the magic mirror that lets you virtually try out make-up and the ‘smart skin analyzer’ that evaluates the condition of your skin and gives advice on the right skin care products was shut off. My question if I could perhaps try it out met with a comparable response as at Home Times.

No magic in Innerfree’s magic mirror

Beyond the gadgets

It makes you wonder how successful all these new technological gadgets actually are when the shops don’t even bother to turn them on any more, especially where it concerns gadgets like magic mirrors and cloud shelves that featured so prominently in Alibaba’s PR about Innesfree, Home Times and Tmall Intersport. Even Xiao Hong Shu’s offline store, located in the same Shanghai shopping mall as Tmall Kerr & Kroes, has removed their magic mirrors and interactive screens since my last visit in October.

I have the same doubts about gamification you’ll find at these retail locations. On the second floor of the Tmall Intersport store visitors can create their own cartoon of a basketball game, which is pretty cool even though the image quality leaves to be desired. But when the store doesn’t update their gamification gimmicks frequently, there’s no real incentive to return when you’ve tried it once. The same goes for many other gadgets that might tickle the curiosity gland of the tech-savvy Chinese consumers; they might come to try it once but will quickly lose interest. Nike’s House of Innovation flagship store on Shanghai Nanjing Road seems to understand this and has changed their original Challenge game for a new game called Air Bubbles. In the meantime, at Tmall Intersport the same game that was present during the shops launch in May 2018 remains. Just like the ‘Lorem ipsum’ dummy text on the poster on the outside wall …

Don’t get me wrong. I’m still as enthusiastic about New Retail as I’ve always been. We shouldn’t forget that all the gimmicks described above are just one of the many aspects of New Retail. For every failed concept there is probably one that is successful or might be when the teething problems are behind them. And Chinese companies like Alibaba should be applauded for launching so many different experiments. This will eventually enable them to figure out what works and what doesn’t, while we in the west often are stuck in our old ways of figuring out the best possible solution first. As such I will continue to include stores with questionable gimmicks in my tours, because there is a lot to learn from China, even from gadgets with questionable added value. And to be completely honest, the people on my tours like playing around with them just as much as the curious Chinese consumers, even if only for ten minutes or so …